Different Types of Fraud and Abuse found in Medical Billing


Excessive billing formalities, loopholes, and complexities in the system lead to inaccuracies in the billing processes. The rules and regulations often make it challenging and complicated to catch fraud and abuse hence it necessary to know Fraud and Abuse found in Medical Billing.

Fraud includes false claims, claims for services not provided, or misleading duration and frequency of medical services provided. Alternatively, types of abuse include claims for needless medical services, erroneous records, or improper billing. Listed below are different types of fraud and abuse found in medical billing:

1. Upcoding: Widespread and frequently used form of fraud, upcoding implies the billing of a more complex and severe procedure than performed. To ensure the correct bill, the physician should document a comprehensive history, which includes the CPT (current procedure terminology) code of the medical procedure performed on the patient.

2. Phantom billing: Another common billing fraud, phantom billing refers to billing for services that were never performed. This billing not only increases costs but it also affects the patient as further treatments by physicians tend to be misguided.

3. Kitchen sink coding/Keystroke mistake: Herein, physicians tend to over code or use an incorrect code, i.e. they tend to code for confirmed diagnosis as well as an additional diagnosis. This could be due to the complicated guidelines which the physician is not aware of or could be justifying treatments.

4. Service Unbundling/Fragmentation: In this billing process, instead of benefiting from packages/bundles’ costs, the provider bills for services and supplies individually thus creating higher invoices. It largely affects the patients covered under Medicare and Medicaid.

5. Inflated hospital charges/Repeat Billing: It is imperative for the patient to ask for an itemized bill and regularly monitor their bills for double/overcharges (services or supplies).

6. Self-Referrals: Though the Stark Law forbids this system, self-referrals occur when the physician or a surgeon recommends tests/surgery for a patient but offers to test/operate himself or refers another doctor from whom he receives compensation.

7. Inconsistent coding (IC): Occurring usually in surgeries, the patient’s diagnosis is misrepresented right before the surgery without any change in symptoms. IC can also occur if the procedures on the physicians’ bills do not correspond with the hospitals’ bill.

8. Cloning: Electronic Health Records (EHR) from one patient are copied to automatically generate another patients’ records where the symptoms have been similar to create elevated bills.

9. Length of stay/room size: Sometimes, higher invoices are charged for the number of days that are not in the provider’s service, along with a difference in the type of room billed vis-à-vis the type of room used.

10. Time in OR: Hospitals at times, charge as per the average time of an operation rather than the actual time taken.

11. Canceled service: Patients should verify that bills are submitted for services performed, rather than for services they have canceled.

12. Unnecessary treatment: Here, the physician tends to perform tests and procedures not required otherwise for the symptom in order to create lofty bills.

13. Downcoding: This practice shows patient recovery which is otherwise not taking place leading to an extended stay in the hospital hence the soaring bills.

The use of anti-fraud plans and policies, awareness and education, could benefit the healthcare industry in preventing such Fraud and Abuse found in Medical Billing. Weeding out health care fraud is fundamental to the welfare of US citizens and the economy.